outburst

“When Scottish farm labourers were fired it meant that the thatched roofs of their houses were burnt to make them unlivable. Sacking meant they were only allowed to take a sackful of belongings with them.”From Susan Stead via Sydney Morning Herald column 8, 2 Sept 2016.

PS Other sources say that being given the sack originally meant being given back your sack of tools to take away, i.e. go find another job. In the Scottish Highland clearances, thatched rooves were burned to force evictions but were not necessarily connected to “getting the sack” of tools or belongings. Perhaps being fired in Susan Stead’s story might refer to burning the roof of the house? But here’s an article that says being fired from a job may be more like a bullet being discharged or fired from a gun.

More on the labour market and unemployment from my Macroeconomics Theory course: “The natural rate of unemployment is the unemployment rate such that the actual inflation rate is equal to the expected inflation rate.” This idea has been guiding economic policy since the 1970s. Let’s unpack it.

The two main components of the prices that are subject to inflation, are the markup (m) on production costs in sale prices, and factors that increase the bargaining power of workers (quaintly called z in macroeconomic equations), such as unions, minimum wages, job security, unemployment benefits – all things that have been squeezed in recent decades.

So, looking at markup, the inflation rate and the unemployment rate are both products of the contest between capital and labour over the effective size of the markup, the markup being at the core of profits and capital accumulation.

Profits are capital’s way of retaining (or appropriating) output beyond that paid in wages for household consumption. Capitalists then choose what parts of the value of that retained extra output to allocate to further investment and accumulation, or to their own personal consumption and pet projects.

Wage and labour condition demands are an important way for labour to gain an increased share of that output, but that can only be at the expense of capital’s share. Capital controls the markup, and accordingly inflation, and contests labours’ demands for a larger share of output.

It’s good not to consume everything we produce all at once, it’s good to save or to work on things that may not provide a benefit for sometime, or will provide a benefit for a long time to come, eg infrastructure, productive capacity, environmental repair. But when the savings that can be put to these purposes are decided by and kept in the hands of private capital, they are outside the power of labouring-consuming citizens. We feel we can only squabble for our little share for immediate consumption, and not make decisions about the far more important portion of savings and investments which affect the future shape of our society and world.

We might battle over price markup, wages and employment, but we don’t get to consider the wise allocation of resources to longterm purposes. Instead, as labour we are the victims of an imposed unsatisfactory unwinnable choice. At the macro level the choice is between the wages and conditions of those who are employed versus the proportion of would be workers who are un or under-employed. At the individual and union level this choice makes for employees who are reluctant to challenge the employers’ share of output, and become trapped in a downward spiral of lower expectations of employment and decent labour conditions and reduced power to demand them.

Macroeconomists in the 1970s figured out the workings of the wage-price upwards spiral which capital wanted to end. The policy answer was to reduce the bargaining power of workers by maintaining a so-called ‘natural rate of unemployment’ and to curtail union power and labour benefits that diminished the threat and risk of unemployment. This could be called a working conditions and employment – union power downward spiral. When capital was committed to ending the wage – price spiral, they worked out what action to take against it.

Unions so far have not worked out a platform around which to mobilise working Australians to reverse the working conditions and employment – union powerdownward spiral. There’s no end in sight.

The labour market is one of three markets, the others are goods (or goods and services) and financial markets. They form the system that produces the output measured in GDP. Macroeconomics attempts to identify “equilibrium” points in the various markets, to understand what central banks and governments can do to stimulate the market behaviour that will produce GDP growth.

Higher GDP is associated with lower unemployment.

The equilibrium position in the labour market is in the level of unemployment related to the level of real wages. It is not equilibrium between the participating labour force and the availability of work, i.e. it is not effectively no unemployment.

The higher the level of real wages the higher the rate of unemployment. I have heard this conventional wisdom expressed by employers as an argument against union campaigns for wage rises because “One person’s wage rise is another person’s job.”

Macroeconomics looks at this from another perspective – not to say that workers should forgo wage rises to save jobs for the unemployed, but to say that unemployment rates should not be allowed to fall too low, so that employers can stave off wage rises, and the damage they cause. A desirable minimum rate of unemployment is absolutely conventional macroeconomics. This rate of unemployment goes under many names including “natural”, “structural”, “equilibrium” and the “Non Accelerating Inflation Rate of Unemployment (NAIRU)”.

More than just wages are implicated as a cause of unemployment. There is a wage setting (WS) relation curve, which describes the relative bargaining power of workers and employers when setting wages, and the corresponding natural rate of unemployment. The price of producing the goods, plus a markup, determines the maximum wage that the employer wants to pay. A more minor factor in making an employer willing to pay a little more is the idea of the “efficiency wage”, that morale and productivity are improved by a higher wage.

Unemployment benefits, minimum wage levels, union activity, and other factors that place a floor under low wages are called the Z factor. These lift what is called the “reservation wage”, the level of pay at which workers are indifferent to whether they are unemployed or not. A higher Z factor, and lower unemployment both make it easier for workers to demand higher wages (which will then cause higher unemployment). The Award system (which prevailed until Australian unions permitted Paul Keating to replace it with enterprise bargaining) is credited by the textbook with having “empowered unions and encouraged their membership.” (p 128)

In a theoretical perfectly competitive labour market (with a zero Z factor), the price of labour could fall low enough that all available labour would be employed. But the Z factor allows potential workers to choose not to work. The lower the Z factor, the more readily employers have access to the amount of labour they want at the price they are willing to pay.

Understanding this macroeconomic theory is like reading a textbook for government policy. The plan to cut Newstart yet again, the intrusive work test, the increase in the retirement age, denying single mothers benefits earlier in the lives of their children – all these policies make the threat of unemployment harsher, and make it harder for unions to defend rights at work.

A very sobering story. A journalist went to a Trump rally, and what he describes really IS what fascism looks like – chauvinist, bigoted, organised, militant, populist anger baying for violence against other human beings. As one commenter says Trump is “making America HATE again.” Hillary might beat it at the ballot box, but Trump is unleashing a social force that only an organised popular movement with humanist ideals can defeat. Shame on those US unions, black organisations and women’s groups who have endorsed Clinton and not Sanders. Bernie’s supporters are the ones who can disarm and defeat Trumpism, by continuing to organise, and by working for economic equality and inclusion that can address the underlying complaints of the haters, without giving in to them, or resorting to repression.

Choosing to be free is the title of a 2014 biography of Rick Turner, a white South African radical thinker, assassinated in 1978.

“Choices. Our lives are made up of all the choices that we make, or do not make. Choices made visible, but not chosen. Choices made, but not understood, or not re-evaluated later, or regretted and carried like a weight. These are, indeed, troubling quiet times. It is tempting to drift into the numb comfort of cynicism. But simply naming the moral depravity of our times is not enough. The only escape from cynicism, at this point, lies in Utopian thought, in articulating and defending a vision of an ‘ideally possible society’.”

He wrote these words and was active under what seemed in the 1970s to be the unassailable and horrendous regime of apartheid. He imagined a world liberated not only from state organised racist repression, but from all relations of oppression, especially capitalist relations, as he elaborates in The eye of the needle: participatory democracy in South Africa. I just discovered the biography’s existence it as I searched for The eye of the needle.

Rick is little known outside South Africa. I thank Mike Newman for introducing me to him, when I studied Popular Education at UTS.

It makes complete sense that the AMWU is not just welcoming but has been agitating for submarine contracts, for military spending, for Australian Defence Force power – when workers are desperate for jobs, and feel powerless.

South Australia, where the bulk of the jobs will be located, has the highest unemployment in Australia – 16 job seekers per vacancy. The Adelaide Advertiser predicts a jobless rate of 14% without the submarine contracts. Around 24,000 jobs in South Australian will have been lost with the end of vehicle manufacturing.

These submarine building jobs are far fewer than could be created by spending the money in other areas. I’m not a budget expert, but look at some comparison figures for ideas of what could be done with this money to provide far more obvious benefits to most people, rather than building up Australia’s war machine.

Remember Kevin Rudd’s promise to end homelessness – costed at $6.1 billion in 2007. Full Gonski funding for public schools over 10 years would need an extra $30 billion. The Victorian government in 2015 announced $22 billion spending on infrastructure over four years that would create 100,000 new jobs. The CSIRO is losing 400 jobs for a cut of $110 million. I don’t have any figures to hand on what funding could do in areas such as renewable energy, public transport infrastructure and vehicles, health, culture and recreation.

Each person in need of a job to earn a wage, to pay the bills, can only hope for employers and governments to invest, to take and keep them on the pay roll. The employers’ reasons for taking on a workforce are not our reasons as workers, citizens and consumers, for judging what work needs to be done, what goods, services and projects will be best for us all.

As long as unions and citizens consent to corporations (and the governments that support them) making these important decisions, then we’ll scramble for the crumbs of the crummy jobs they offer us, even when we know the results of the work we must do are not in our interests.

Yesterday, an 18-year-old man died on his Work for the Dole site at the Toowoomba Showgrounds. The 18-year-old Meringandan man died after he fell from a flatbed trailer being towed by a tractor at the Toowoomba Showgrounds at about 12.20pm.

Queensland Ambulance advanced care paramedics tried to treat the man at the scene of the incident but were unable to stabilise him.

Australian Unemployed Workers’ Union (AUWU) President Owen Bennett is demanding that Coalition Government immediately abolish Work for the Dole.

“The Australian Unemployed Workers’ Union would like to extend its thoughts and sympathies to the family and friends who have suffered this tragic loss.

“The Government’s failure to ensure adequate safety measures are in place for all those in the Work for the Dole program have cost this man his life”, said Mr Bennett.

“It is clear that the Coalition Government can no longer guarantee the safety of workers at Work for the Dole sites.”

Bennett points to examples of unemployed workers being threatened with immediate suspension of their unemployment entitlement if they raised concerns about the safety of their Work for the Dole site.

“Was a tragedy like this only a matter of time in this punitive environment?

“Work for the Dole is dangerous. It is a billion dollar forced labour program which does not help people into work. It must be abolished immediately.”

Bennett is calling on the Trade Union movement and welfare advocacy groups to put pressure on the Government to abolish Work for the Dole.

“Yesterday as this man died at his Work for the Dole site in Toowoomba, the AUWU held a forum in Melbourne where the ACTU President Ged Kearny, ACOSS CEO Cassandra Goldie and Jobs Australia CEO David Thompson all indicated that they wanted Work for the Dole abolished. It is now time to act swiftly to make sure nothing like this ever happens again”.

The measure of the man is a movie, whose French title translates literally as The law of the market.

It’s a movie about the humiliation of a working class man, the daily, regular lived experience of repeated humiliations and disrespect, some small, some large, of a skilled worker whose job was wiped out when his factory was shut down.

The prolific, talented, award-winning French actor Vincent Lindon plays Thierry Taugourdeau. In the opening scene Thierry has just been told by a case worker at the employment agency that he will never be able to get a job as a crane driver, despite having done a course, because he has no construction experience. Thierry is frustrated that he has already wasted the first 4 months of his access to a higher rate of unemployment benefits, since his company closed, on a hopeless strategy that had been recommended to him by another case worker. The frustration is amplified by the circular conversation in which Thierry and the case worker repeat their version of events to each other, and the case worker is unhelpful about an alternative.

That scene sets the tone for Thierry’s experience, living life by the law of the market. There are many circular, fruitless conversations – with a former workmate who wants to sue the company for faking insolvency; with a banking advisor who inspects his finances and recommends that he sell his apartment, with a prospective buyer who wants to pay only 6300 Euros for his modest mobile holiday cabin worth at least 7000 Euro; with a recruiter in a Skype job interview; with his son’s teacher who says that his son’s grades have declined and may mean he misses out on the degree of his dreams. The very worst, most humiliating scene is in a class for job seekers, where other students in the class tear apart Thierry’s performance in a video of a mock interview. The viewing is sometimes excruciating, sometimes tedious. At some moments I ask “What would Robert Geudigean have done with this material?” But I want to like this movie because its material is so important.

Thierry’s life is not relentlessly depressing because he loves his family. He has fun with his wife. We see them at dancing classes. And he cares tenderly for his son, who has a physical disability. He is not a passive victim. He had been part of the union campaign to try to save the factory that closed down. He makes his own decisions about the advice other people give him.

The story line is barely the point of this movie, there is very little suspense, and very slow progress. It is a study in Thierry’s experience, the camera follows him in close up, in a similar way (but different too) to two other recent movies I’ve seen – Son of Saul (which is intensely suspenseful because Saul has a mission with a short deadline, and it is set in Auschwitz where deaths are constant), and Dheepan (which is about three Tamil refugees attempting to rebuild their lives in France).

Is it a reflection of the low level of working class resistance that this movie has almost no story? It focuses on the experience of one individual trying to live his life as well as he can, as he comes up against the relentless forces of the markets, the labour market, the finance market, the real estate market, that keep him in his place?

Plot spoiler alert coming up. You could stop reading here if you think you’ll see the movie. When Thierry does get a job, there are new humiliations for other people, which require Thierry to be complicit. He gives no sign of feeling unhappy about this. He quietly gets on with his job. Until all of a sudden, at the end, there is a breaking point.

Electing the first ever indigenous woman to be a member of the House of Representatives should be a cause for celebration, but ALP factional leaders are dirtying that possible achievement, by doing deals that mean there will be no rank and file preselections in at least two federal seats. Deals and democracy don’t go together. Deals drive members away because deals disenfranchise members from having a say in the party. If all the factions agree on which candidates they prefer for which seat, they should at least have the guts to go and campaign amongst the local party members for those candidates. It’s a shame that Linda Burney has agreed to be tainted by a short term fix to her problem, that worsens a far bigger, longer term problem for the labour movement.

“Asked how she felt about the intervention of national executive to effectively sideline local branch members, Ms Burney said she had won Canterbury three times through preselection.

“It’s not like I’ve been given things on a plate,” she said.

“I’ve worked hard. I respect the party. My job is to make sure the people of Barton respect me.”

But the intervention will inevitably draw criticism from party members critical of the Labor machine overriding the rights of local branches.

“Despite the fanfare and commitment to change at the recent NSW state conference, the fact is the rank and file members won’t get a say in one of the biggest factional deals in history,” one party member said.

Ms Burney is a member of the left faction. Her move to Barton has been linked to a complicated deal to ensure federal opposition front bencher Joel Fitzgibbon – a right faction member – gets preselected in Hunter.”

“abolishing the patent system” plus “open-source pharmaceuticals movement [which] is experimenting with using prizes as an incentive for teams of volunteer scientists to work on new treatment approaches. Once invented and tested, the drugs would be free for any firm to make.”

No – it’s from right-wing business magazine The Economist. I’m finding some interesting snippets in this magazine since I’ve recently got a subscription. The article goes on to conclude (with advice even conservative governments could take, if they weren’t cosy with or scared of Big Pharma):

“Realistically, though, the chances that new approaches to research will dramatically cut the cost of medicines look slender. That leaves more administrative approaches. It could be made easier to import cheap copies of unpatented drugs made in other countries. Buyers of medicines could share more information about the different prices they are being charged for the same pills. They might be firmer in refusing to pay over the odds for new treatments that offer marginal gains. Medicare, America’s health system for the elderly, could be allowed to try to negotiate with the drugmakers, something it is banned from doing now. If the producers are becoming more efficient, the buyers should respond.”